Product Life Cycle
Product life cycle is the pattern of sales recorded by a product from the launch stage until its withdrawal from the market. There are four stages in the product life cycle. # The first one is the introduction stage. This stage is when the product has just been launched or released. On this stage, the sales of the product are quite low but it may increase but slowly. # The second stage is the growth stage. It is when the product is effectively promoted and well accepted by the market. On this stage, the sales of the product would go significantly. However, no products will stay on this stage forever, it will eventually leads the product to the next stage. This is due to the increasing competition, customers who will eventually find the product less appealing, taste changes in consumer and saturation of the market. # Every product will eventually move to the next stage, which is the maturity of saturation stage. At this stage, sales will decline because it is failed to grow. However, it will not decline significantly. # The last stage is the decline stage. On this stage, the sales will decline but steadily. The sales is declining because of either there’s no strategy tried or failed, or the product is outdated that makes replacement the only solution. Withdrawal will eventually happens when the product becomes unprofitable. The main uses of product life cycle are: * To assist with planning marketing-mix decisions Planning the product life cycle can help you picture the product’s life. Although it can’t guarantee you to get the precise how is the product’s life going to be but it usually can at least give the picture of it. However to consider the final decisions, you will have to also depend on the action of the competitors, economy state and the business’ marketing objectives. * To identify how the cash flow depend on the cycle Cash flow is essential to be recognized to survive the business. Ignoring the link with the product life cycle could be very serious. Cash flow is negative during the development due to the product’s cost that is high. At introduction stage, sales increase, cash flow then should be improved. However it is depend on the length of consumer credit offered. The most positive cash flows can be seen during the maturity stage. As the sales are high, promotion costs might be limited and spare factory capacity would be low. During the decline stage, the cash flow will be reduced as the price is also being reduced and the sales are falling. * To recognise the product portfolio’s balance '' To have an ideal position for a business, a business should developed and introduced new products when one product is declining. This is because a business should balance the cash flows. Factory capacity should also be kept as roughly constant levels. '''Product life cycle – Evaluation' Evaluating the product life cycle is important. It is to assess the performance of the firm’s current product range. It is also an important part of a marketing audit. Product life cycle, however, can’t be used to predict the future of the next developed product as it is only based on current data or the past. However, product life cycle can be used together with the sales forecasts and management experience to assist with the effective product planning. Product decisions – An Evaluation Product may be considered as the most important component of the marketing mix. However, it is just one part of the strategy to win and keep customers. Things like price, promotion and place are the key factors behind a successful product as well. A balanced and combined mix is essential, however without a product, even the best-laid marketing plans can fail.Category:BusinessCategory:Business StudiesCategory:Business StudyCategory:MarketingCategory:Marketing MIxCategory:Marketing MixCategory:Price & ProductCategory:PriceCategory:ProductCategory:PromotionCategory:Product Life CycleCategory:LifeCategory:CycleCategory:FinanceCategory:MoneyCategory:BrandCategory:Education